The office of General Counsel issued the following informal opinion on
May 15, 2001, representing the position of the New York State Insurance Department.

RE: External Appeals

Issue:

Is a health plan required to furnish notice of availability of an
external appeal if the subscribers coverage had terminated between submission of an
internal appeal and rendition of a determination on that appeal?

Conclusion:

Yes, if the policy or contract were subject to the New York Insurance
Law. However, since the inquirers organizations contracts are not subject to
review by this Department, the question should be addressed to the Department of Health.

Facts:

The inquirers organization is a Prepaid Health Service Plan
holding a Certificate of Authority from the Commissioner of Health pursuant to New York
Public Health Law § 4403-a (McKinney 2001) and has issued a contract to an individual
whose medical benefits are provided by Medicaid.

On March 12, 2001, the organization notified the subscriber in question
that it would not pay for a procedure because of a "lack of medical necessity".
On March 20, 2001, the subscriber pursued an internal appeal pursuant to New York Public
Health Law § 4904 (McKinney 2001). On March 31, 2001, the subscriber lost his or her
Medicaid eligibility and was, therefore, terminated as a subscriber.

The inquirer seeks this Departments confirmation, that because
the former subscriber would no longer be entitled to benefits from the organization, there
is no need to notify the former subscriber of the availability of an external appeal
pursuant to New York Public Health Law § 4910 (McKinney 2001).

Analysis:

Since the organization, as a PHSP, is governed by the New York Public
Health Law, the inquiry should be directed to that agency. Since, however, New York Public
Health Law Article 49 (McKinney 2001) is substantially similar to New York Insurance Law
Article 49 (McKinney 2001), this Departments views may be instructive.

The inquirer relies upon a provision in the regulations of the
Department of Health, N.Y. Comp. R. & Regs. tit. 10, § 98-2.9(i) (2001), which is
identical to this Departments Regulation, N.Y. Comp. R. & Regs. tit. 11, §
410.9(i) (2001), and provides:

In the event an adverse determination is overturned on external appeal,
or in the event that the health care plan reverses a denial which is the subject of
external appeal, the health care plan shall provide, arrange to provide or make payment
for the health care service(s) which is the basis of the external appeal to the enrollee
to the extent that such health care service(s) is provided while the enrollee has coverage
with the health care plan. Nothing herein shall be construed to require the health care
plan to provide any health care services to an individual who is no longer an enrollee of
that health care plan at the time of an external appeal agent's reversal of a health care
plan's utilization review denial. (emphasis added)

It is the belief of this Department, subject to confirmation by the
Department of Health, that, since Medicaid eligibility may be restored, there is no
assurance that the former subscriber would not again be a subscriber when the external
appeal is finally determined.

In addition, were the contract one that was subject to this
Departments review in accordance with New York Public Health Law § 4406 (McKinney
2001), the provisions of N.Y. Comp. R. & Regs. tit. 11, § 52.17(a)(15) (2001) might
require a continued payment, notwithstanding termination of the contract. That provision
provides, in pertinent part:

Termination of a policy shall be without prejudice to any
continuous loss which commenced while the policy was in force, but the extension of
benefits beyond the period while the policy was in force may be predicated upon the
continuous total disability of the insured, or limited to the extent of the benefit
period, if any, or payment of the maximum benefit. If no specific benefit period is
provided, an extended benefit period of at least 12 months must be included in the
contract. A loss shall commence when a medical service, whether or not covered by the
policy, is rendered for the condition causing the total disability.

While this Department cannot provide an authoritative interpretation of
a Regulation of the Department of Health, since the provision in question is identical to
one in an Insurance Department Regulation, the above should be instructive.

For further information you may contact Principal Attorney Alan Rachlin
at the New York City Office.